China group buys $6bn Glencore Peru copper mine

Las Bambas is one of the largest mines in Xstrata's portfolio

A Chinese consortium is buying Glencore Xstrata's copper mine in Peru in a $6bn (£3.6bn) all-cash deal, marking one of China's largest mining acquisitions.

The consortium is led by MMG Limited and includes China's Citic Metal.

The acquisition is subject to regulatory approvals but all parties expect the deal to be done by the end of September.

Analysts expect Glencore to use the proceeds from the sale to reduce its debt.

The mine is expected to produce more than 450,000 tonnes of copper a year in its first five years.

China relies heavily on the metal, which is used in electronics production.

Ivan Glasenberg, Glencore's chief executive, said in a statement: "Since we acquired Xstrata... our team has taken decisive steps to de-risk Las Bambas, which has culminated in this compelling offer from the consortium."

"Our willingness to sell reflects the level of the offer and our conviction that we can utilise the sale proceeds to create additional shareholder value."

Power

Glencore and Xstrata merged in May last year.

China gave its approval to the merger after Glencore agreed to sell its stake in Xstrata's copper mining project in Peru to a buyer approved by Chinese authorities. The mining giant also agreed to supply a minimum volume of copper concentrate to China for a period of eight years.

The country's authorities were concerned that the merger between Glencore and Xstrata would have given the business too much power over the copper market. China is the world's biggest buyer of copper.

The Peru copper mine deal comes days after UK department store chain House of Fraser sold a majority stake in its business to the Chinese conglomerate Sanpower, in a $803m deal.

That acquisition represents China's largest foreign retail investment and gives Sanpower an 89% share in House of Fraser.

And earlier this year personal computer maker Lenovo spent around $5bn on acquisitions, which included the purchase of IBM's low-end server unit.